Stop foreclosures


If you are behind on your mortgage payments, the possibility of foreclosure will quickly turn to a reality if you don’t take action now. Unless you can bring your mortgage payments current or negotiate a loan modification or other workout agreement, your lender will eventually foreclose.

What can be done to stop a foreclosure if the lender has denied a loan modification, forbearance, short sale, or other workout request?

The fact that your lender has denied your loan modification or other workout request doesn’t mean that you are doomed to lose your home in foreclosure because. . .BANKRUPTCY STOPS FORECLOSURE.

That’s right! When you file bankruptcy, your lender loses the right to foreclose. . .at least temporarily. If your lender has started the foreclosure process, it must immediately cancel the foreclosure sale because the automatic stay prohibits your lender from foreclosing or taking any other actions to regain possession of the property or collect the delinquent payments from you without first obtaining permission from the bankruptcy court.

So, filing bankruptcy can stop a foreclosure. But will I be able to keep my home after I file bankruptcy?

It depends. If you file a Chapter 7 bankruptcy, you will only be able to keep your home if you are able to bring your mortgage payments current. In most cases, you will probably have to sign a reaffirmation agreement. A reaffirmation agreement is an agreement between you and your lender which states that you will pay the mortgage according to the original loan terms or pursuant to modified terms as set forth in the agreement in exchange for the lender allowing you to remain in the home. If you reaffirm your mortgage, it will not be discharged in the bankruptcy. This means that if you later default, your lender will be able to foreclosure and pursue a deficiency judgment against you if it suffers a loss as a result of your default.

If you do not reaffirm the debt and are unable to bring your mortgage payments current, your lender will file a Motion for Relief from Stay. If the motion is granted, and in most Chapter 7 cases it will be, your lender will initiate foreclosure proceedings.

If you file a Chapter 13 case, you will be allowed to keep you home as long as certain conditions are met.
· You must make all post-petition mortgage payments on time. You are required to make these payments directly to your lender beginning the first month after you file bankruptcy; and
· You must make all your Chapter 13 plan payments.

The amazing thing about filing a Chapter 13 bankruptcy to stop foreclosure is that it allows you to pay the mortgage arrearage in installments rather than in a lump sum. The mortgage arrearage is paid out of the monies you pay into the Chapter 13 plan each month. Imagine the relief you will feel knowing that you don’t have to come up with thousands of dollars to cure the delinquency on your mortgage in a lump sum.

Don’t Wait Until the Last Minute. . .Time is Limited
If you have received a foreclosure notice from your lender, you must act now. You can’t wait until the last minute to file bankruptcy. So call Advantage Financial Services today and we’ll explain to you exactly how bankruptcy can stop a foreclosure.

I’ve Heard that Filing Bankruptcy Will Only Make My Financial Problems Worse!
The mortgage companies and banks want you to believe that filing bankruptcy will destroy you financially. But that’s simply not true. If you file bankruptcy, you have a chance to get a fresh start, to save your home from foreclosure, and begin rebuilding your credit. . .all without a bunch of creditors breathing down your neck and trying to bleed you of your last dime. Doesn’t sound too bad, right?

But here’s what can happen if you’re behind on your mortgage payments and you don’t file bankruptcy.

Foreclosure – Depending on where you live, your lender may have the right to move forward with a non-judicial foreclosure after you default on your mortgage loan. In most states, non-judicial foreclosures happen very quickly. All your lender has to do is follow the statutory notice and publication requirements for a non-judicial foreclosure and then it can sell your property at a foreclosure sale on the courthouse steps or any other authorized location. Non-judicial foreclosure sales are conducted in an auction format with the property going to the highest bidder. If there are no bidders, the lender is deemed to be the highest bidder and will receive title to the property. In some states, a non-judicial foreclosure takes as little as 45 days from notice to the actual sale.

If you live in a judicial foreclosure state, your lender must file a lawsuit and obtain a court order before it can foreclose. In these states, it may take 12 to 18 months for a lender to receive the court order authorizing it to foreclose. Once it receives that order, it will move very quickly to auction off your home.

Whether a lender utilizes the judicial or non-judicial foreclosure process, the proceeds from the foreclosure sale will be applied toward the foreclosing lender’s loan balance, attorney’s fees, and court costs. On the off chance that there are any funds left, they will be distributed to junior lien holders in their order of priority.

Eviction – Many lenders are offering homeowners cash for keys after a foreclosure sale. These lenders will pay a homeowner a small sum of money, usually about $1500 or so, to vacate the home by a specified date. If the homeowner accepts the cash for keys, he must leave the premises in a “broom clean” condition and remove all his personal belongings from the property before the lender will turn the cash over to him.

However, if the homeowner refuses the cash for keys or fails to vacate the property after the foreclosure sale, the lender will initiate eviction proceedings. Once your lender obtains authorization to evict you, the sheriff or marshal will lock you out of the house. In some states, your personal belongs will be thrown out into the street when you are evicted.

Deficiency Judgment – In most foreclosures, the property is sold for less than what is owed on it, resulting in a loss for the foreclosing lender. In some states, a lender has the right to seek a deficiency judgment to recoup that loss. State law governs the process a lender must follow to obtain a deficiency judgment and some states have enacted legislation which prevents lenders from seeking a deficiency judgment under certain circumstances. Nevertheless, if a lender has the right to seek a deficiency judgment, it must first file a lawsuit against you. In most instances, the lender will win this lawsuit and will obtain an order authorizing collection of the deficiency from you.

If a lender obtains a deficiency judgment, it has the right to pursue all remedies against you. This means that the lender can garnish your wages and levy on your bank account and other property. And until the judgment has been paid in full, interest will continue to accrue.

But there is good news! If you file bankruptcy, it can stop the lender from obtaining a deficiency judgment or from collecting on a deficiency judgment. A deficiency judgment becomes a lien against all your property. However, the Bankruptcy Code will allow you to avoid a judgment lien if it impairs an exemption. This means that the deficiency judgment, whether it’s $10,000 or $100,000 or more, will be treated as an unsecured debt. If you file a Chapter 7 bankruptcy, it will be wiped out. If you file a Chapter 13 case, how much you pay, if anything, will depend on the composition of your Chapter 13 plan.

What if I Can’t Afford to Keep the House?
If you’re like some people, maybe you realize that you simply can’t afford the house or you just don’t want the responsibility of homeownership anymore. That is your decision and the great thing is that bankruptcy can help you walk away from the home. Our bankruptcy attorneys represent dozens of clients each year who make the decision to walk away; so, it’s nothing to be ashamed of.

Whether you file a Chapter 7 or a Chapter 13 case, you have the right to surrender your home. If you choose to surrender the home, you must vacate the premises within a specified period of time and turn possession over to your lender. If the home is worth less than what you owe, the difference will be classified as an unsecured debt. If you file a Chapter 7 case, it will be discharged. If you file a Chapter 13 case, the amount you will pay on that difference will depend on how much you can afford to pay. But the bottom line is that your lender will not have the right to seek a deficiency judgment against you to recoup its loss.

Will Bankruptcy Help if I Have a Second or Third Mortgage?
It is not uncommon for homeowners to have a second or even a third mortgage on their home. At Advantage Financial Services we see it every day and we are able to help some of these homeowners eliminate these junior mortgages through a legal process called “strip off”. The Bankruptcy Code gives debtors the right to strip off (eliminate) wholly unsecured junior liens. Strip off is a very powerful tool for homeowners who have junior mortgages and are underwater (owe more than what their home is worth) and often makes the difference between being able to keep a home and having to walk away from it. If you have questions about how strip off works, give our bankruptcy attorneys a call; they will be happy to explain strip off and to answer any other questions you may have about bankruptcy.

The Power of Bankruptcy to Stop Foreclosure
Bankruptcy is the most powerful tool you have to stop a foreclosure. The automatic stay of bankruptcy stops your lender from foreclosing without first obtaining permission from the bankruptcy court. Additionally, filing bankruptcy buys you time to:

· Get the money you need to bring your mortgage payments current or
· Sell the property.

You see, you are not at the mercy of your lender or your other creditors. Filing bankruptcy allows you to take control of your situation and gives you the ability to make decisions without pressure from bills collectors or the threat of foreclosure or repossession hanging over your head. But it’s important that you call Bankruptcy Professionals as soon as possible. You don’t have a lot of time if your lender has already initiated foreclosure proceedings. Our bankruptcy attorney are available to explain exactly how bankruptcy can be used to stop foreclosure and to help you get the bankruptcy process started. Don’t be embarrassed to call; our bankruptcy attorneys know how desperate you are to find a solution and they are prepared to assist you in any way they can.

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